Principal Issues: Whether the filing date is 90 days from the end of the taxation year or 30 days after the discontinuance of business.
Position: 90 days from the end of the taxation year.
Reasons: The provisions of subsection 205(2) of the Regulations do not apply to the filing of a T3 return of income because Part II of the Regulations only pertains to information returns.
MEMORANDUM TO FILE 2011-039427
There have been a number of recent telephone inquiries concerning the accelerated filing due date provided in subsection 205(2) of Part II of the Income Tax Regulations, and whether it applies to the T3 Trust Income Tax and Information Return or to the Summary of Trust Income Allocations and Designations and the associated T3 information slips. As a general rule, the T3 return, T3 slips, and T3 summary have to be filed no later than 90 days after the trust's tax year-end.
The issue has arisen as a result of many SIFT trusts that have ceased business at the end of 2010. The matter is of particular importance because the election under subparagraph 88.1(1)(d)(ii) of the Income Tax Act, which allows a rollover of SIFT assets to a corporation instead of a FMV disposition, has to be made on of before the trust's filing date for its taxation year.
The "filing-due date" for a taxation year of a taxpayer is defined in subsection 248(1) of the Act to mean the day on or before which the taxpayer's return of income under Part I is required to be filed or would be required to be filed if tax under that Part were payable by the taxpayer for the year.
As its title denotes, the T3 Trust Income Tax and Information Return is both a return of income and an information return. As a return of income it has to be filed within 90 days from the trust's tax year-end as provided in paragraph 150(1)(c) of the Act. Part II of the Regulations pertains to the filing of information returns, and section 204, in particular, applies to the filing of information returns by estates and trusts. Accordingly, the Summary of Trust Income Allocations and Designations together with the associated T3 information slips has to be filed within 90 days from the end of the taxation year as stipulated in subsection 204(2).
Subsection 205(2) departs from the foregoing provisions of subsection 204(2) in that where a person, who is required to make a return under Part II, discontinues business or activity, the return has to be filed within 30 days of the discontinuance. Given that Part II only pertains to information returns, it follows that the provisions of subsection 205(2) do not apply to the filing of a T3 return of income. Consequently, the election under subparagraph 88.1(1)(d)(ii) can be made up to and including 90 days after the end of the trust's taxation year.
February 9, 2011 Richard Aronoff Rulings Officer Insolvency and Administrative Law Section Income Tax Rulings Directorate